Market investigations

Under the UK Enterprise Act of 2002, the former complex and scale monopoly inquiry regime was replaced by 'market investigations provisions'. Sector investigations are also pursued in other jurisdictions.

The UK Office of Fair Trading (OFT) and certain regulators can refer specific markets to the Competition Commission for a public investigation whenever there are reasonable grounds to suspect that competition is distorted or restricted. The European Commission also has market investigation powers, as do the authorities in some Member States (e.g. Ireland).

Inquiries can focus narrowly on a particular industry practice but most market investigations involve a wider appraisal of whether competition is functioning effectively. Such inquiries tend to be time-consuming (usually lasting more than a year), and the parties are often required to submit a large amount of information.

The themes examined in market investigations typically include how competition in oligopolistic markets can be expected to evolve, how prices and profits have moved over time and whether the industry in question is meeting the needs of its customers.

Economic analysis is central to market investigations. It provides insights into how competitive markets should be expected to work, and which remedies are most appropriate to achieve more competitive outcomes. We can help with the analysis of large data sets using appropriate empirical techniques. We have extensive experience of market investigations.

UK examples include:

• Payment protection insurance (2009)
• Northern Irish personal banking (2007)
• Classified directory advertising services (2006)
• Domestic bulk liquefied petroleum gas (2006)
• Store cards (2006)
• Extended warranties on domestic electrical goods (2003)
• Veterinary medicines (2003)
• SME banking (2002)
• Supply of milk in Scotland (2000)
• Supermarkets (2000)
• Mobile call termination (1999)

We have advised on OFT inquiries in which the behaviour concerned was deemed not to warrant a referral to the Competition Commission, as well as on government inquiries investigating similar issues (for example, the Cruickshank report into competition in UK banking). We have also advised on sector investigations in other jurisdictions, for example the inquiry into payment systems and retail banking in South Africa (2006-8).

Print this page